Vietnam at risk of becoming captive market for imported cars: industry ministry

Last year 440,000 cars were manufactured in Vietnam and 176,590 were imported. But imports from the Association of Southeast Asian Nations member countries, mainly Thailand and Indonesia, doubling the period before 2018.

According to data from the General Department of Vietnam Customs, last year the two countries accounted for 144,703 cars, or 83% of imports, that cost US$2.5 billion.

Foreign carmakers with factories in Vietnam import 80-90% of their cars sold in the market.

Imports of cars and car parts are expected to skyrocket in the next 10 years when the import tax is gradually reduced to 0% under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the European Union-Vietnam Free Trade Agreement.

"In the context of integration, if the Government and ministries do not quickly have appropriate policies and solutions to encourage and support the development of the domestic auto industry, Vietnam will become a market for foreign firms, and passenger cars in the market will be all imports," the Ministry of Industry and Trade warned.

The prices of cars in Vietnam are nearly double that in Thailand and Indonesia due to taxes and fees as well as the low volume of domestic manufacture, the ministry said, noting that automakers are producing far below their designed capacity.

'Manufacturers expect the government to come up with comprehensive solutions to stimulate car demand and increase market size by lowering taxes and fees, developing transport infrastructure and having preferential policies for the auto industry, it added.

Recently the 12-member Vehicles Importers Vietnam Association called on the government to reduce the registration fee on imported cars by 50% to spur demand.

Earlier, the government instructed the Ministries of Finance and Industry and Trade to consider lowering the fee for locally made cars.